Asia-Europe ocean trade is a nightmare scenario - 'unless you're a carrier'.

"It's shocking," says a British forwarder. "The speed and pace of changes are phenomenal and mimic the run-up to the peak of the pandemic."

The forwarder warned that box lines are scrapping FAK rate quotes when bookings are made and that contract capacity is being cut.

"It's a nightmare. Demand is extremely high - we're seeing 10-20% growth year after year in our customer base. Either customers are restocking, or they need an extra two-week inventory buffer due to longer transits around the Cape.

"Add to that the start of the traditional 'peak season' in May, which is now 'seasonal' again. All in all, it's a nightmare scenario for importers right now."

Scan Global Logistics also warned customers that westbound freight rates in Asia "exploded."

"A cocktail of sustained demand for capacity, empty sailing schedules and a year-round outlook that offers no positive prospects for the Red Sea crisis has put freight rates on a rapidly rising path," the company said.

Scan told customers that "black clouds are hanging on the horizon - unless you're a container carrier."

Container lines are busy implementing peak season surcharges and GRIs "on both long- and short-term contracts," according to Scan.

Hapag-Lloyd, MSC and CMA CGM have all announced increased freight rates between the Far East and Europe, two from mid-May. But the British forwarder revealed: "Carriers are putting rates out - and then pulling them back because they've already been replaced by higher levels.

"FAK and spot facilities and mechanisms for most shipping companies are now closed until June, or later - so you can't book, even if you're willing to pay higher prices."

He added that unrelated shipping routes are now also being affected: "Asia-Latin America rates, for example, are now $9,000-$10,000 per 40ft and capacity is being diverted to that more profitable route."

Contract and spot rates are also beginning to diverge.

Scan Global said: "This is reminiscent of rate development during Covid, we have a situation where contracted long-term rates and short-term rates are far apart.

"In some cases, short- and long-term rates can differ by more than $3,000 per 40ft DC for the same trade. As an additional comment, carriers are increasingly choosing to prioritize higher-revenue cargo and load it in an attempt to mitigate the bleak financial results of Q4 23 and, to some extent, the mediocre results of Q1 24."

Part of the problem also lies in a container shortage. A Container Xchange customer said yesterday that, despite the fact that depots are not experiencing major pressure from inventory levels, container prices "continue to rise and adjust approximately every 48 hours."

"This increase is largely due to uncertainty about the situation in the Red Sea, but also to suppliers and sellers wanting to hedge their risks.

The company added that diversions around the Cape of Good Hope had likely absorbed "a significant number" of containers, while others were "stranded at network locations."

"Shipping these containers may not be economically feasible due to factors such as high transport costs, cheap storage at the location or containers approaching the end of their life.

Scan Global asked for "understanding" from customers and said it expected the situation to continue until May.

The British forwarder added: "This has implications for the entire Far East. The new tonnage doesn't make a dent or is being deployed as a repositioning tool for containers - so that doesn't help.

"This is just the beginning, or almost the beginning, of an explosion of capacity shortages and oceans going north faster - even pay-to-play can't save the day in this case."